A securities class action is a lawsuit brought on behalf of a group of investors who purchased a stock during a particular period of time (known as a “class period”) and suffered economic loss as a result of fraud or violations of federal or state securities laws.
Public pension plans have a fiduciary obligation to recover funds lost through investments in public securities as the result of corporate mismanagement and/or fraud. A class action settlement is an efficient way to satisfy that responsibility.
Identifying Losses
If you purchased securities during a certain time frame, or the class period, and you sustained losses as a result of the company’s alleged fraud or other securities law violations, you may be eligible to receive a settlement payment. The amount of money you are awarded depends on the number of claims submitted and how much money is available in the settlement fund.
The security class action settlement recovery process is complex and can be confusing. For instance, you must know which securities were traded during the class period and the specific types of losses you suffered as a result of the company’s fraud or other securities law violations.
Filing Proof of Claim Forms
If you are a creditor that is owed money by someone who has filed for bankruptcy, you need to file a proof of claim form. A proof of claim tells the court how much you are owed and what type of claim you have.
A proof of claim is typically accepted by the court unless the trustee or debtor objects to it. However, it doesn’t guarantee that you will be repaid the full amount of your claim.
For claims that are not straightforward, have multiple assets or are for large amounts of debt, it may be advisable to seek advice from counsel.
Monitoring Claims
For securities class actions that result in a settlement, claimants will be contacted by claims administrators. These administrators will validate claims, collect payment information, and disburse awards to eligible claimants.
The claim processing process can be complex and time-consuming, especially for funds that are not filing their own securities claims. Battea helps our clients by analyzing their historical trade data and auditing their existing filings to identify and fix any problems that may be hindering the process.
In some cases, we’ve been able to recover awards for clients even when the claims administrators have denied them previously. For example, we worked with a $500 million long short equity hedge fund that had several of their claims rejected due to issues with their trade data. After correcting their data, we were able to recover more than $2 million in awards for them.
Payment
The settlement recovery process can be an extremely complex and time consuming process. Even the most straightforward securities class actions can require a significant amount of effort and resources to ensure that all eligible settlement funds are recovered.
Having an effective and comprehensive securities class action settlement recovery program in place can help reduce the risk of missing out on eligible settlement monies that could have been used to support your organization’s operations.
This includes the identification of settlement opportunities, filing claims (proof of claim forms) with the court, and monitoring those claims until recovery is received. This can be done in-house or with the assistance of a third party.
